Pricing

lenny1020

Hi Guys.
lets say I am providing a service costing 250 euro in labour.100 euro in travel time and travel costs.How do I price the job.What should I charge so that everything is covered and show a decent profit.I am told that bad pricing is the main reason start up business fails in the first year.
Thanks Guys,

cormie

Hi,
as long as you're making a profit you're happy with when the job is finished and it's good value and on par with what your service is worth, then that's all that matters really.

If you feel the travel time makes your price non competitive, you can just outline this to the customer and say something like "as I'm based in x, the price would be a bit more expensive than usual" just so they don't go spreading the word that you're 3x dearer than Francisco down the road for the same job. They still have the option to go with you and it will be up to them to make that decision.

What is it you're setting up?

lenny1020

Thank you for your prompt reply.
Hopefully we can privide business solutions to the retail trade.
Stock control.Market research ect.
Might be an opening for these services in recessionary times.
Cheers.

Bandara

Hi Lenny

Just on your concept, I would somewhat disagree that such service is good in recessionary times, the first things that I see a lot of retailers have cut is the 'consultancy' and research end of things. At the minute its about keeping the day to day stuff going, unnecessary spending is not an option.

How can you convince someone that they need the service?

Also, most retail chains have these facilities in house as their marketing depts can do them as part of their day to day work.

Its a tough sell.

ghosttown

Morning Lenny,
In these times, the concept of travel time needs to be looked at also. I go to Dublin (100km away) 2 years ago and it was 200km at €1 a km.
Now it's petrol at €20 and 2 hours at say €30 an hour, so down over 50%.
Do not base your travel time on civil service rates, it will no longer be acceptable !

cormie

Hammertime wrote: »

Hi Lenny

Just on your concept, I would somewhat disagree that such service is good in recessionary times, the first things that I see a lot of retailers have cut is the 'consultancy' and research end of things. At the minute its about keeping the day to day stuff going, unnecessary spending is not an option.

How can you convince someone that they need the service?

Also, most retail chains have these facilities in house as their marketing depts can do them as part of their day to day work.

Its a tough sell.

I'd agree with this, the smaller businesses would have a close watch by the owner on what's selling and what's not and what's in the pipeline of new products whereas the larger companies would have their own people on this.

Unless you were to charges on a commission rate of a % of increased sales over 2009 figures or something like that. But that's probably not the best way to go about it either.

lenny1020

Thanks for the replys.Hopefully the service we provide will be attractive to all types of retail outlets .Mainly because we have spent a lt of time and thaught into sourcing top of the range unique software which can identify issues and discrepancies that inhouse auditing either dont see or choose not to see.
Thanks Guys.

Cheeble

Bad pricing starts out by looking at the cost of the job.

Your price should be based on what your service is worth, not on what it costs to provide.

Cheeble-eers

rexel1

Just because you have spent a lot of money on a product does not make it a good product. As has been said most business will not spend money on what they percieve as 'consultancy fees' in these times. You may see it as a good viable product but a lot of businesses will se it as another unnecessary expense

lenny1020

Our Market Research has indicated there is a demand out there for what we will provide.Thanks for the reply .

kenbrady

lenny1020 wrote: »

Our Market Research has indicated there is a demand out there for what we will provide.Thanks for the reply .

and what price were the people who wanted what you provide prepared to pay.
I want a lamborghini but won't pay the price they want.

lenny1020

Who wants Lamborghini.Perhaps we should work within our means.IE Quality service for a fair price.
Cheers.

Cheeble

lenny1020 wrote: »

Our Market Research has indicated there is a demand out there for what we will provide.

I'm a little confused now. Your OP was asking for advice on pricing and yet you've done some market research.

Demand for any product or service is price sensitive (to a greater or lesser extent). So, it's not really possible to say with certainty that there is a demand for something unless you specify the price point when you do the research.

So, if your market research was based on a price, you don't need to be asking here. If it wasn't, then you don't really know whether there is a demand or not

Cheeble-eers

lenny1020

Yes i can see where you are comeing from there.We have a price in mind for our services .I just wondered was there a set tool for price calculation thats all.Thank you for your reply .Cheers.

antoinolachtnai

The theory is that you figure out how much value your service provides, and how much it costs for you to provide it, and price somewhere in between.

In practice, this is tricky to do.

a.

lenny1020

Thank you .Just dont need any nasty surprises after lots of hard work .
Cheers